Dubai government-owned low-cost carrier (LCC) flydubai has re-entered the fray to pick up a stake in budget airline SpiceJet. The Gulf LCC’s move comes at a time when its neighbour Qatar Airways is in initial talks with SpiceJet owner Ajay Singh for a possible investment.
Singh had told TOI in April, about two months after he had re-acquired SpiceJet from the Sun Group, that foreign airlines had approached him for investment. “Dubai-based flydubai was in talks with SpiceJet soon after Ajay Singh took control of the airline in February. However given the precarious state in which the previous owners had left SpiceJet, those talks did not materialize as SpiceJet was not offered a good deal then,” said a source.
Now, with SpiceJet scripting a dramatic recovery under Singh and Qatar Airways pursuing him vigorously, flydubai has re-started talks with the Indian LCC. Singh will opt for the airline that offers a better deal in terms of pricing and future growth prospects of SpiceJet, which he launched in 2005.
SpiceJet spokesman Ajay Jasra did not comment as he said the airline was in the silent phase with Q1 results going to be announced this week.
Industry sources say Dubai is keen to gain a foothold in SpiceJet to get further access to India. Emirates, which is also owned by the government of Dubai, is known as the virtual national carrier of India. UPA had hiked flying rights on the India-Dubai sector from 18,400 seats a week in May 2007 to 54,200 seats in March 2010. In February, UPA-II gave a parting gift of 11,000 more seats to Dubai.
Now giving any more seats, or bilaterals, to Dubai is a political hot potato due to opposition from Indian carriers, mainly Air India. Hence, an investment by flydubai in SpiceJet could mean more access to Indian flyers for the mega airport in Dubai.
Qatar Airways has been keen to pick up 49% stake in IndiGo, India’s biggest airline by domestic carriage, for years but the Rahul Bhatia-owned airline has not acceded that offer till now.
SpiceJet had accumulated losses of Rs 3,210 crore as on March 31, 2015, and on that date, the company’s liabilities exceed its assets by Rs 1,264 crore.
Also, the Jet-Etihad deal set a precedent for an airline of a foreign country investing in an Indian carrier after that country gets increased flying rights to India. At the time of that deal, UPA-II had agreed to hike the 13,000 weekly seats Abu Dhabi’s Etihad had by an additional 37,000 in a phased manner by 2015-end.
